The Office of Information and Regulatory Affairs (OIRA) has issued an updated notice indicating that the Centers for Medicare and Medicaid Services’ (CMS) expected release of its Notice of Proposed Rulemaking (NPRM) proposals for Section 111 civil money penalties (CMPs) has been pushed back to December 2019.
This is the third delay this year of CMS’s forthcoming penalty proposals. By way of background, OIRA’s initial notice released in December 2018 targeted release for September 2019. Then in September 2019 OIRA issued a subsequent notice indicating an expected release date of October 2019. Now, as reflected above, the new notice pushes back the expected release of the proposals until sometime in December 2019.
Of note, similar to OIRA’s September notice, the new notice indicates that this matter is “pending review” which means that CMS has completed drafting its proposed CMPs and they are now being reviewed by the Office of Management and Budget (OMB) per standard protocol.
In terms of Section 111’s penalty itself, the statutory authority establishing CMS’s right to impose CMPs is codified at 42 U.S.C. 1395y(b)(8)(E)(i) which states as follows:
An applicable plan that fails to comply with the [Section 111 reporting] requirements … may be subject to a civil money penalty of up to $1,000 for each day of noncompliance with respect to each claimant …A civil money penalty under this clause shall be in addition to any other penalties prescribed by law and in addition to any Medicare secondary payer claim under this subchapter with respect to an individual. (Emphasis Added).
To effectuate this provision, CMS is tasked with “specifying practices for which sanctions will and will not be imposed under subparagraph (E), including not imposing sanctions for good faith efforts to identify a beneficiary pursuant to this paragraph under an applicable entity responsible for reporting information.” It is from these statutory provisions upon which CMS’ forthcoming proposals will be based.
ISO Claims Partners continues to monitor developments in this area and will provide future updates as warranted. In the interim, please contact the author if you have any questions.
 This information was provided to the author by the Office of Management and Budget (OMB) per his call with the agency on 9/24/19 in relation to the OIRA September notice.
 Applicable plans include liability (including self-insurance), no-fault insurance, and workers’ compensation laws or plans. 42 U.S.C. 1395y (b)(8)(F). As part of CMS’ implementation of Section 111, the agency refers to the party obligated to report as the Responsible Reporting Entity (RRE). Under Section 111, applicable plans are required to report certain claims and settlements involving Medicare beneficiaries to CMS in accordance with CMS’s Section 111 reporting directives.
 By way of background, the original Section 111 penalty provision stated that an applicable plan shall be subject to a civil money penalty of $1,000 for each day of noncompliance with respect to each claimant.” The phrase “shall be subject” in the original statute raised concerns that a strict interpretation of this provision could result in the penalty being automatically assessed, without consideration of legitimate defenses or disputes an applicable plan may have; or without regard to the plan’s inability to comply with Section 111 despite due diligence and good faith efforts. Given these concerns, steps were taken to modify the penalty provision as part of the SMART Act reform bill signed into law by President Obama in January 2013. The SMART Act changed the penalty provision by adding a discretionary element to the penalty’s application and amount. Specifically, Section 203 struck the “shall be subject” language and replaced it with the phrase “may be subject to a civil money penalty up to $1,000 for each day of noncompliance with respect to each claimant.”
 42 U.S.C. 1395y(b)(8)(I).